As of 2015, about 25 percent of small business owners were using personal accounts for business-related transactions. Sure, it’s been over three years since then, but so many small businesses are yet to operate business bank accounts.
In 2018 and beyond, it’s not enough to open a business checking account. You also need a business savings account.
But why is this necessary? Isn’t it a waste of time (and money) opening multiple accounts for your business?
In this article, we’re sharing the benefits you’ll reap after opening a business savings account. Read on!
Develop a Savings Culture
Developing a savings habit is a much-hyped concept in the realm of personal finance, but not so much in business finance. In business, it’s usually about spending money to make money, right?
We’re here to tell you developing a business savings culture is just as important, and having a business savings account is an ideal way to develop this culture.
When you save regularly and involve your teams or employees, the savings habit will trickle down. Sooner or later, the habit will morph into a culture.
The net effect of a savings culture is reduced wastage of resources, which results in lower overhead. Consequently, you’ll have more money to put into the savings account.
Prepare for a Rainy Day
Rainy days don’t just strike individuals. A time will come when your business will need money urgently.
For instance, thieves could break into your store and make way with your inventory. Or a storm could hit and destroy your premises.
Are you going to sit around and wait for insurance to take their sweet time to pay up? No. A savvy business owner digs into their pocket and buys some inventory to keep the business operational.
With a maintained business savings account, you’ll have money to fall back on. It might not be a lot, but it will keep your business going instead of closing shop and losing clients.
Improve Your Business Credit Rating
A business credit rating works in the same way as a personal credit score. Most banks and other lenders use this score to determine your business’ creditworthiness.
Having an active business savings account helps you grow your credit rating. Should you need to apply for a small business loan, you’ll stand a strong chance of getting approved. The savings account will increase the bank’s confidence in your business’ ability to service the loan.
Given that many entrepreneurs are turning to small business loans as a source of capital, you should be doing everything you can to improve your business’ credit.
The average savings account earns less than one percent interest annually. So the prospect of earning interest isn’t a very motivating factor to operate a business savings account. You’ll, nonetheless, earn some money when you open one.
Especially if you can save a substantially large amount, you can earn some decent interest. For example, maintaining $20,000 in a savings account will earn you about $200 annually. This is money you can use to settle a few business bills.
A Business Savings Account Is a Must-Have
Really, every business should have a business savings account. The benefits, as we’ve discussed, are worth the effort. From building your credit standing to building a financial cushion and earning you some interest, you have every reason to open one.
The only task that remains is to find a suitable bank.